Sequestration might be manageable, experts say

Sep. 18, 2012 - 09:32AM
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The Bipartisan Policy Center estimates that even if the sequestration cuts stick, the annual Pentagon budget would dip below $500 billion for just one year, return to current levels by 2017 and approach $600 billion by 2020. (Air Force)

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Devastating. Catastrophe. Disaster.

That is how Pentagon officials, lawmakers and industry executives have described $500 billion in automatic military budget cuts set to kick in Jan. 2 unless Congress comes up with a solution.

Yet amid all the dramatic rhetoric about those cuts, several nonpartisan Washington think tanks have produced analyses that suggest the process, known as sequestration, might be manageable.

The Bipartisan Policy Center estimates that even if the sequestration cuts stick, the annual Pentagon budget would dip below $500 billion for just one year, return to current levels by 2017 and approach $600 billion by 2020.

And the Center for Strategic and Budgetary Assessments (CSBA) projects the Pentagon likely could avoid canceling any weapon programs and would not be forced to lay off troops or slash benefits.

The $500 billion in cuts will be parceled out at $50 billion annually over 10 years. Yet even if they take place, Washington likely still will spend more on its military than the rest of the world combined, experts said.

The reason, they said, is that the Pentagon’s budget has experienced such dramatic growth over the past decade, taking the fiscal 2013 budget down 10 percent would be tantamount to bringing it down to 2006 levels — when there was no hue and cry over an insufficient level of defense spending.

That opinion isn’t shared by members of industry, or on Capitol Hill.

Sen. John McCain, ranking member of the upper chamber’s Armed Services Committee, told reporters Sept. 11 he believes sequestration is probably going to happen unless the president shows some leadership. Several times last week, McCain publicly urged Obama to call lawmakers to the White House for a summit aimed at avoiding the cuts.

Yet, the Bipartisan Policy Center study includes a chart that shows the DoD’s base budget would fall from around $550 billion to a little less than $500 billion in 2013. From that point, it would begin steadily rising.

By 2015, it would be well above $500 billion again, growing to almost $600 billion by the end of this decade.

The CSBA study, conducted by Todd Harrison, acknowledges that a sequester “would slow down nearly everything DoD does” and predicts fewer new contract awards and extensions.

As McCain noted last week, the CSBA study says the DoD would be forced to buy things “in smaller quantities.” McCain said that means the department would be able to afford “a lot less.”

But Harrison’s findings suggest the cuts would not trigger “immediate program terminations” because “funding already obligated on contracts would not be affected.”

Defense insiders have said most major defense firms likely could ride out a dip in annual Pentagon spending because they are still sitting on funds from the final years of the post-9/11 defense buildup.

Even if a final deal heading off most of the cuts comes as late as April — as some lawmakers have mentioned — many defense sources doubt the full $500 billion cut will stick for a decade.

That means DoD would avoid a requirement to cut more than $50 billion annually from current spending plans after Congress passes a legislative package that replaces or voids the national defense cuts. Under such a scenario, at worst, the annual defense budget would climb at the rate of inflation. And if Republicans take control of Congress and the White House, it could grow even more annually.

Gordon Adams, who oversaw defense budgeting for the Clinton administration, said even if the entire $500 billion, decadelong cut to planned spending sticks, “it will be more than enough to keep the nation secure.

“You would essentially go back to 2006 and 2007 levels,” he said. “The American military would still be the biggest, toughest kid on the block. … The Pentagon would still be buying the most advanced equipment, just at slightly smaller numbers each year.”

For instance, Adams said DoD officials have stated a sequester would force them to do things like buy 25 F-35 fighter jets annually, rather than 29. “So you’d still be buying two dozen of the most advanced fighter in production in the world,” he said.

One key lawmaker, Senate Armed Services Committee Chairman Carl Levin, D-Mich., predicted last week that not one penny of the cuts will be enacted.

“One way or the other, since 90 percent of us don’t want it, it won’t happen,” Levin said Sept. 11. “And my hope is that it won’t happen early enough to avoid any instability.”

It has become clear that McCain wants to strike a deal to void the cuts. “I … commit to making compromises to doing things I might not otherwise agree to keep this … from taking place,” he said Sept. 13 on the Senate floor.

Moments later, McCain told Defense News he is keeping his cards close as sequestration avoidance talks continue on Capitol Hill.

“I don’t have anything specific in mind and I wouldn’t say if I did,” he said. “For me to say I’d agree to something before we enter into real negotiations wouldn’t be very wise.”